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Accounting Expert Answers & Study Resources : Page 633

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Joint Ventures, Push-Down Accounting, and Leveraged Buyouts 11.If a single joint venturer has a venture interest in excess of 50%: a.all other venturers must have equal voting rights. b.the venture must use parent company/subsidiary accounting rather than venture accounting. c.the venture may be organized as a partnership, but not as an undivided interest. d.the venture.

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  • Joint Ventures, Push-Down Accounting, and Leveraged Buyouts 11.If a single joint
  • Accounting
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Exercise 6 Pretax operating incomes of Patterson Corporation and its 70%-owned subsidiary, Hamilton Corporation, for the year 2003, are shown below. Hamilton pays total dividends of $60,000 for the year. There are no unamortized cost-book differentials relating to Patterson’s investment in Hamilton. During the year, Patterson sold land to Hamilton for.

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  • Exercise 6 Pretax operating incomes of Patterson Corporation and its 70%-owned
  • Accounting
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Exercise 10 At January 1, 2002, the stockholders’ equity of Parvo Corporation and its 60%-owned subsidiary, Swenson Corporation, are as follows: Parvo Swenson Common stock, $10 par value $ 700,000 $ 400,000 Retained earnings 800,000 50,000 Totals $ 1,500,000 $ 450,000 Swenson’s net income for 2002 was $40,000. Parvo’s Investment in Swenson account balance on December 31, 2002 was equal to its underlying equity on December 31,.

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  • Exercise 10 At January 1, 2002, the stockholders’ equity of Parvo
  • Accounting
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Multiple Choice Questions 1.Material constructive gains and losses from intercompany bond holdings are: a.classified as a part of consolidated stockholders’ equity because they do not represent real gains and losses to the consolidated entity. b.included as other items of revenue or expense in the consolidated income statement. c.classified as extraordinary items in the consolidated.

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  • Multiple Choice Questions 1.Material constructive gains and losses from intercompany bond
  • Accounting
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Exercise 4 Crocker Corporation paid $225,000 for a 70% interest in Saperstein Corporation on January 1, 2003. On that date, Saperstein’s balance sheet accounts, at book value and fair value, were as follows: Book Value Fair Value Assets Cash $ 25,000 $ 25,000 Accounts receivable-net 45,000 55,000 Inventories 40,000 60,000 Property, plant, and equipment-net 140,000 125,000 Total assets $ 250,000 $ 265,000 Equities Accounts payable $ 40,000 $ 40,000 Common stock 120,000 Retained earnings 90,000 Total liab. & equity $ 250,000 Required: Prepare a balance sheet for Saperstein.

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  • Exercise 4 Crocker Corporation paid $225,000 for a 70% interest in
  • Accounting
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Exercise 3 Separate company and consolidated income statements for Perzee and Shiela Corporations for the year ended December 31, 2003 are summarized as follows: Perzee Sheila Consoli- dated Sales Revenue $ 500,000 $ 100,000 $ 600,000 Income from Sheila 19,900 Bond interest income 6,000 Gain on bond retirement 3,000 Total revenues 519,900 106,000 603,000 Cost of sales $ 280,000 $ 50,000 $ 330,000 Bond interest expense 9,000 3,600 Other expenses 120,900 31,000 151,900 Minority interest income 7,500 Total expenses 409,900 81,000 493,000 Net income $ 110,000 $ 25,000 $ 110,000 The interest income and expense eliminations relate to a.

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  • Exercise 3 Separate company and consolidated income statements for Perzee and
  • Accounting
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Exercise 3 Pat Corporation acquired an 80% interest in Sen Corporation on January 1, 2003 for $20,000. Balance sheet and fair value information on this date is summarized as follows: Pat Book Value Sen Book Value Sen Fair Value Current assets $ 15,000 $ 9,000 $ 9,000 Land and Building-net 35,000 7,000 7,000 Equipment 8,000 4,000 6,000 Total assets $ 58,000 $ 20,000 $ 22,000 Liabilities $ 27,000 $ 10,000 10,000 Capital stock 18,000 4,000 Retained earnings 13,000 6,000 Total liab. & equity $ 58,000 $ 20,000 Required: 1.Prepare an entry on the books of Sen Corporation to record the push-down.

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  • Exercise 3 Pat Corporation acquired an 80% interest in Sen Corporation
  • Accounting
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Exercise 1 Stuart Corporation’s stockholders’ equity on December 31, 2002 was as follows: 10% cumulative preferred stock, $100 par value,   callable at $105, with one year dividends in arrears $ 10,000 Common stock, $1 par value 50,000 Additional paid-in capital 150,000 Retained earnings 160,000 Total stockholders’ equity $ 370,000 On January 1, 2003, Trent Corporation paid $300,000 for a 70% interest in Stuart’s underlying.

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  • Exercise 1 Stuart Corporation’s stockholders’ equity December 31, 2002 was as
  • Accounting
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Exercise 5 At January 1, 2002, the stockholders’ equity of Parveen Corporation and its 52%-owned subsidiary, Senco Corporation, are as follows: Parveen Senco Common stock, $10 par value $ 700,000 $ 400,000 Retained earnings 800,000 50,000 Totals $ 1,500,000 $ 450,000 Senco’s net income for 2002 was $50,000. Parveen’s Investment in Senco account balance on December 31, 2002 was equal to its underlying equity on December 31,.

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  • Exercise 5 At January 1, 2002, the stockholders’ equity of Parveen
  • Accounting
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11.Bond Interest Expense for 2003 on Patty’s bonds should be reported in the consolidated income statement at: a.$40,000. b.$43,200. c.$45,700. d.$54,000. 12.Bonds Payable and Interest Payable, respectively, will appear in the December 31, 2003 consolidated balance sheet of Patty Corporation and Subsidiary in the amounts of: a.$720,000 and $21,600. b.$720,000 and $27,000. c.$900,000 and $21,600. d.$900,000 and $27,000. Use the.

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  • 11.Bond Interest Expense for 2003 Patty’s bonds should be reported
  • Accounting
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Exercise 9 Alvin Corporation owns 80% of Bevis Corporation, Bevis Corporation owns 60% of Caleb Corporation, and Caleb Corporation owns 10% of Alvin Corporation. The separate incomes (excluding investment income), of Alvin, Bevis, and Caleb are $300,000, $100,000, and $80,000, respectively. Required: Calculate the consolidated net income for Alvin Corporation and.

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  • Exercise 9 Alvin Corporation owns 80% of Bevis Corporation, Bevis Corporation
  • Accounting
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11.In calculating parent company and consolidated EPS, it may be necessary to replace the parent’s equity in subsidiary earnings with the parent’s equity in subsidiary’s diluted EPS. This replacement calculation is an adjustment to the: a.subsidiary’s basic earnings. b.parent's basic earnings. c.parent's diluted earnings. d.parent's common shares and common share equivalents. 12.A subsidiary has some.

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  • 11.In calculating parent company and consolidated EPS, it may be
  • Accounting
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Exercise 5 On January 1, 2003, Peter Corporation acquired a 90% interest in Sorkin Corporation for $210,000 when Sorkin’s book values and fair values were as follows: Book Value Fair Value Assets Cash $ 26,000 $ 26,000 Accounts receivable-net 48,000 52,000 Inventories 55,000 83,000 Property, plant, and equipment-net 190,000 225,000 Total assets $ 319,000 $ 386,000 Liabilities & Equity Accounts payable $ 55,000 $ 55,000 Long-term debt 200,000 190,000 Common stock 50,000 Retained earnings $ 14,000 Required: Prepare the journal entry on Sorkin’s books to push-down the values reflected.

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  • Exercise 5 On January 1, 2003, Peter Corporation acquired a 90%
  • Accounting
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Exercise 8 Jerome Corporation purchased 75% of Ragweed Corporation on January 1, 2003, for $230,000. Balance sheets for the two companies on this date, prepared just prior to the purchase, are provided below.  Jerome Book Values Ragweed Book Values Ragweed Fair Values Cash $ 330,000 $ 10,000 $ 10,000 Inventory 270,000 70,000 90,000 Buildings & equipment- net 500,000 120,000 190,000 Total assets $ 1,100,000 $ 200,000 $ 290,000 Common stock $ 300,000 $ 95,000 Retained earnings 800,000 105,000 Total equities $ 1,100,000 $ 200,000 Required: Prepare a consolidated balance sheet using the entity theory of consolidation. Exercise.

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  • Exercise 8 Jerome Corporation purchased 75% of Ragweed Corporation January 1,
  • Accounting
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Multiple Choice Questions Preferred stock 1.When subsidiary preferred stock is acquired by the parent company, the preferred stock is retired from the viewpoint of the consolidated entity. In recording its acquisition of preferred stock the: a.parent company adjusts the investment in preferred stock to its book value at acquisition and any difference between.

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  • Multiple Choice Questions Preferred stock 1.When subsidiary preferred stock acquired by the
  • Accounting
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11.Poe Corporation owns 80% of Shaw Corporation and has separate income of $100,000 for 2003. Shaw Corporation has separate income of $50,000 and owns 70% of the outstanding stock of Turk Corporation. Turk Corporation has separate income of $40,000. The correct amount of consolidated net income is: a.$162,400. b.$164,400. c.$172,400. d.$174,400. 12.In Question 11, the.

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  • 11.Poe Corporation owns 80% of Shaw Corporation and has separate
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Exercise 8 On January 1, 2003, Rogers Corporation acquired all of the outstanding voting common stock of Ripp Corporation in a business combination.  The total purchase price for the stock was $1,300,000. Ripp’s net assets on this date were as follows: Ripp’s Book Values Ripp’s Fair Values Cash $ 20,000 $ 20,000 Inventories 210,000 240,000 Land 200,000 250,000 Building-net 600,000 900,000 Total assets $ 1,030,000 $ 1,410,000 Liabilities $ 230,000 $ 230,000 Common stock 400,000 Retained earnings 400,000 Total equities $ 1,030,000 Assume that for federal income.

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  • Exercise 8 On January 1, 2003, Rogers Corporation acquired all of
  • Accounting
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Multiple Choice Questions Consolidation theories Use the following information in answering Questions 1 and 2. Parquin Corporation acquired a 90% interest in Squatter Corporation for $180,000 cash on January 1, 2003. The following information is available for Squatter at that time. Book Value Fair Value Difference Current assets $ 80,000 $ 100,000 $ 20,000 Plant assets 120,000 150,000 30,000 Liabilities ( 100,000 ) ( 100,000 ) 0 Net assets $ 100,000 $ 150,000 1.Under the entity theory, a consolidated balance sheet prepared immediately.

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  • Multiple Choice Questions Consolidation theories Use the following information in answering Questions
  • Accounting
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Exercise 7 Jerome Corporation purchased 75% of Ragweed Corporation on January 1, 2003, for $230,000. Balance sheets for the two companies on this date, prepared just prior to the purchase, are provided below.  Jerome Book Values Ragweed Book Values Ragweed Fair Values Cash $ 330,000 $ 10,000 $ 10,000 Inventory 270,000 70,000 90,000 Buildings & equipment- net 500,000 120,000 190,000 Total assets $ 1,100,000 $ 200,000 $ 290,000 Common stock $ 300,000 95,000 Retained earnings 800,000 105,000 Total equities $ 1,100,000 $ 200,000 Required: Prepare one consolidated balance sheet using the proprietary (pro-rata) theory of.

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  • Exercise 7 Jerome Corporation purchased 75% of Ragweed Corporation January 1,
  • Accounting
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Exercise 2 Poster Corporation purchased an 80% interest in Sena Corporation for $840,000 on January 1, 2003. Sena's balance sheet book values and accompanying fair values on this date are shown below. Book Value Fair Value Entity Theory Push- Down Balance Sheet Parent Company Theory Push- Down Balance Sheet Cash $ 30,000 $ 30,000 Receivables 200,000 200,000 Inventory 300,000 360,000 Land 50,000 90,000 Plant assets-net 250,000 300,000 Total Assets $ 830,000 $980,000 Current liabilities $ 180,000 $180,000 Other liabilities 120,000 100,000 Common Stock 400,000 Retained Earnings 130,000 Total Liab. & Equity $ 830,000 Required Complete the push-down columns of Sena Corporation’s restructured balance.

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  • Exercise 2 Poster Corporation purchased an 80% interest in Sena Corporation
  • Accounting
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